Signify margin miss clouds path to full-year targets, shares fall

By Leo Marchandon and Aleksandra Kret

July 24 (Reuters) - Signify's quarterly sales met expectations but weaker profitability and concerns over the scale of margin improvement needed in the second half weighed on investor sentiment, sending its shares down 3% on Friday.

J.P. Morgan said the margin miss could lead to mid-single-digit downgrades to consensus 2026 adjusted EBITA forecasts, while Degroof Petercam said the second-half margin improvement needed to achieve guidance looked demanding.

The world's largest lighting maker sells into homes, offices, shops, factories, streets and public buildings, making its results a useful gauge of how customers are spending.

Net income fell to 17 million euros in the second quarter from a year earlier, while adjusted earnings before interest, taxes and amortisation (EBITA) margin decreased to 6.1%.

Sales fell 6.0% to 1.33 billion euros ($1.51 billion) in the April-June period, in line with company-provided consensus, while comparable sales declined 3.6%.

Signify reported profitability below expectations as weak demand in parts of its Professional business and retailer destocking in Consumer weighed on performance.

Professional, its largest division, posted sales of 886 million euros, down 4.8% from a year earlier, as strong project activity in the United States and the rest of the world was offset by weakness in Europe.

Consumer, which includes Philips Hue smart lighting products, reported sales of 285 million euros, down 3.7%, as lower retailer sell-in linked to inventory destocking offset strong underlying consumer demand for connected products.

The company cut headcount to 25,866 from 29,456 a year earlier, mostly factory staff, as lower production volumes fed into a broader 180 million euro cost-reduction programme.

($1 = 0.8789 euros)

(Reporting by Leo Marchandon and Aleksandra Kret in Gdansk; editing by Bartosz Dabrowski and Matt Scuffham)